What is the exact amount of rent?
There are a few fundamental questions you need to answer before renting your property to a tenant (before posting ads, scheduling showings, etc.). How can a rent be set without first-hand experience in the real estate market? Which course of action should be taken to prevent potential conflicts and do justice to the owner's responsibilities? Here are the most important factors to consider before signing a lease.
Rent setting via market research on comparable properties
Whether you're on the hunt for a house, apartment, studio, or furnished student housing, it's always a good idea to compare rental ads. This initial step, however, will not be sufficient to position yourself on the rental market.
"To determine what the best offer is, you should compare prices of similar listings”.
Finding out if the supply is lower than the demand (tension) or higher (tendency to vacant units) will help you hone your renting expertise. It's possible that the rent would be higher in the former scenario. Research the market as early as possible to determine whether rents are increasing, decreasing, or remaining stable.
Keep in mind that after the first six months of occupancy, a tenant has the right to file a complaint with the city's rent board if they feel they have been overcharged. However, you may need to work out an amicable solution with the Rent Board if your rent is too low and you want to raise it (otherwise, you will have to go to the Justice of the Peace).
Last but not least, keep in mind that rent increases are capped at 5% of the initial investment under Luxembourg law, and can occur once every two years.
Taxes and fees that can be deducted from rent
You collect additional fees from the tenant on top of the rent to cover the costs you incurred. Only costs directly related to the tenant can be deducted from this total. Costs incurred in practice must always be reasonable (invoices, receipts, etc.).
Major co-ownership expenses such as property tax, energy passport, and meeting organization costs are covered by the landlord (cleaning, changing the boilers, etc.).
However, the renter is responsible for paying for utilities and routine maintenance
What the owner is responsible for in terms of utilities, rental agreements, and inventory. Without a current Energy Performance Certificate, a rental property cannot be considered. After issue, you'll have 10 years to use this certificate. If this deadline has passed, you'll have to pay to have a new one ordered from a qualified professional. Indeed, one of the required criteria to be mentioned on the advertisements is the energy class of the property.
"The energy efficiency rating of the home is one of the criteria that must be disclosed in the listings”.
Concurrently, ensure you have all the documents you'll need for a rental, including the lease and an inventory of the property's furnishings. Drafting the lease requires more expertise, even if inventory of fixtures grids are readily available online (the standard models do not always meet the specificities of the accommodation). Therefore, it is recommended that you have a professional service prepare the contract for you to ensure your best interests are protected in the event of a disagreement.
It is still challenging for an individual owner to begin renting out their property. In order to rent legally, but also to delegate the management of the property and avoid various administrative worries, you should not hesitate to contact an agency (repairs, unpaid rent, vacancy, etc.).